“Efforts to construct and apply survey-based well-being indicators are still in
their infancy. Among the most urgent still-unresolved practical questions are:
Which SWB questions should governments ask? And how should responses to
different questions be weighted relative to each other?”

Ori Heffetz is an assistant professor of economics
at Johnson whose research interests
lie in the social and cultural aspects
of economic behavior. His work examines
how our predictions concerning the behavior
of economic agents change once we incorporate
into our models the observation
that agents never operate in social isolation,
and that economic decisions are always
made in a cultural context. In addition
to his research on subjective well-being,
he has studied the empirical relationships
between spending patterns of U.S. households
and the extent to which spending
on different consumer products and services is visible or displayable to other
members of society. Heffetz holds a BA in physics and philosophy from Tel Aviv
University and a PhD in economics from Princeton University. He has traveled
extensively in developing countries, studying problems that lie at the crossroads
of economics, society, and culture.

Vantage Point

Quantifying happiness

Should governments monitor citizens’
happiness and use that data to inform policy?
Many say yes; the question is how.

By Ori Heffetz

Most of our students at Johnson may be too young to remember, but
in 1988, for the first time in history, an a cappella song made it to the
#1 spot on the Billboard Hot 100 chart. Many of our alumni however
won’t forget the huge success of Bobby McFerrin’s “Don’t Worry, Be
Happy.” The artist’s unparalleled singing abilities aside, the song became
an instant hit much thanks to its simple message that immediately
resonated with everybody. After all, nobody wants to worry, and
everybody wants to be happy.

But if everybody wants to be happy, shouldn’t governments be
constantly monitoring the public’s level of happiness, assessing how
different policies affect it, and perhaps even explicitly designing policies
to improve national happiness (and reduce national worry)? Wouldn’t it
make sense to add official happiness measures to the battery of indicators
governments already closely track and tie policy to — such as GDP, the
rate of unemployment, and the rate of inflation?

Researchers increasingly think so. Some advocate conducting
nation-wide “happiness” surveys (or “subjective well-being” (SWB)
surveys, to use the academic term), and using the responses to construct
indicators that would be tracked alongside GDP-like measures. Although
these proposals are controversial among economists, policymakers have
begun to embrace them. In the past two years alone, for example, the
U.S. National Academy of Sciences’ Committee on National Statistics
convened a series of meetings of a “Panel on Measuring Subjective
Well-Being in a Policy-Relevant Framework”; the OECD, as part of
its Better Life Initiative, has been holding conferences on “Measuring
Well-Being for Development and Policy Making”; and the U.K. Office
of National Statistics began including the following SWB questions in
its Integrated Household Survey, a survey that reaches 200,000 Britons
annually:

Overall, how satisfied are you with your life nowadays?
Overall, how happy did you feel yesterday?
Overall, how anxious did you feel yesterday?
Overall, to what extent do you feel the things you do in your
life are worthwhile?

These and other efforts follow the French government’s creation,
in 2008, of the now-famous Stiglitz Commission — officially, the
“Commission on the Measurement of Economic Performance and Social
Progress”— whose members included a few Nobel laureates, and whose
2009 report recommends the collection and publication of SWB data
by national statistical agencies. No wonder Gross National Happiness,
a concept conceived in Bhutan in the 1970’s, is back in the headlines.
Can a few simple questions on a national survey, such as the British
(Fab) Four above, be the basis of a reliable indicator of national wellbeing?
Will the Bank of England soon tie its monetary policy to the
“rate of happiness” (or to the “rate of anxiety”), making central banks
that still tie their policies to traditional indicators such as the rate of
unemployment seem outdated?

Not so fast. While demand for SWB indicators is clearly on the rise
— witness Ben Bernanke’s discussion of “the economics of happiness”
in several speeches in recent years — efforts to construct and apply
survey-based well-being indicators are still in their infancy. Among
the most urgent still-unresolved practical questions are: Which SWB
questions should governments ask? And how should responses to different
questions be weighted relative to each other? The four questions above,
for example, ask about life satisfaction, happiness, anxiety, and life being
worthwhile. But does the public consider these the only — or even the
most — important dimensions of well-being? And even if it does, how
would people feel about — and will they support — a government
policy that increases, say, both happiness and anxiety at the same time?

These are the questions that my colleagues — Dan Benjamin and
Nichole Szembrot here at Cornell, and Miles Kimball at the University
of Michigan — and I address in our working paper, “Beyond Happiness and Satisfaction: Toward Well-Being Indices Based on Stated Preference” (2012). The idea behind our proposed method for answering the two
questions — the “what to ask” question and the “how to weight different
answers” question — is simple and democratic, and consists of two steps:
first, gather a list, as long as you can, of potential SWB questions that
governments could potentially include in their surveys; and second, let
the public determine, through a special-purpose survey that we designed,
the relative weights.

To demonstrate our method, we followed these two steps. We began
by compiling a list of 136 aspects of well-being, based on key factors
proposed as important components of well-being in major works in
philosophy, psychology, and economics. While far from exhaustive, our
list represents, as far as we know, the most comprehensive compilation
effort to date. It includes SWB measures widely used by economists
(e.g., happiness and life satisfaction) as well as other measures, including
those related to goals and achievements, freedoms, engagement, morality,
self-expression, relationships, and the well-being of others. In addition,
for comparison purposes, we included “objective” measures that are
commonly used as indicators of well-being (e.g., GDP, unemployment,
inflation).

Next, we designed and conducted what economists call a stated
preference (SP) survey to estimate the relative marginal utility of these
136 aspects of well-being. In plain English, what that means is that we
asked a few thousands of survey respondents to state their preference
between aspects from our list (e.g., if you had to choose, would you
prefer slightly more love in your life or slightly more sense of control
over your life?). With enough such questions, we could estimate the
relative weight our respondents put on each of these aspects of life.

Among other things, we found that while commonly measured
aspects of well-being such as happiness, life satisfaction, and health
are indeed among those with the largest relative weight (or marginal
utility), other aspects that are measured less commonly have relative
marginal utilities that are at least as large. These include aspects related
to family (well-being, happiness, and relationship quality); security
(financial, physical, and with regard to life and the future in general);
values (morality and meaning); and having options (freedom of choice,
and resources). Using policy-choice questions in which respondents vote
between two policies that differ in how they affect aspects of well-being
for everyone in the nation — rather than state which of two options they
prefer for themselves — we continued to find the patterns above and
in addition found high marginal utilities for aspects related to political
rights, morality of others, and compassion towards others, in particular
the poor and others who struggle. We also explored differences across
demographic-group and political-orientation subpopulations of our
respondents.

But these findings themselves are perhaps less important. After
all, our sample was not representative, and we had to make practical
compromises in our data collection and analysis that governments would
not have to make. The main contribution of our work, we believe, lies
in outlining a new method, and in demonstrating its feasibility. Our
method for evaluating SWB questions and for determining their relative
weight in a well-being index can now be discussed, criticized, and, as a
result, improved on. The familiar conventional indicators such as GDP,
inflation, and unemployment did not start in the refined state we know
them today: they have been continually fine-tuned over many decades.
We hope that our work will contribute to a similar process regarding a
SWB-based index.

Many practical obstacles still have to be overcome before standardized,
systematic measurement and tracking of SWB for policymaking purposes
becomes a reality. But if the endeavor is successful, then perhaps our
children — who I doubt will have heard of Bobby McFerrin’s #1 hit
- will at some point consider a DWBH index - “Don’t Worry Be
Happy” index - as standard as GDP and other indicators.